Michigan puts Internet lottery on hold pending review

By DAVID EGGERT, Associated Press

Tuesday, June 25, 2013

LANSING, Mich. (AP) — The Michigan Lottery is indefinitely halting plans to sell tickets and offer games on the Internet after skeptical lawmakers blocked funding to launch an online lottery in early 2014.

“Plans for an iLottery system have been suspended so that the Lottery may further evaluate the program,” lottery spokeswoman Andi Brancato told The Associated Press Tuesday, declining further comment.

Gov. Rick Snyder asked for nearly $3.4 million in the next state budget to implement the iLottery as a way to pump more money into public schools by keeping the lottery relevant for people used to buying products online. The money would have gone toward promotion and hiring the equivalent of 10 full-time workers.

The Republican-led Legislature refused to go along because some legislators worry about increased gambling addiction, personal debt and a potential hit to brick-and-mortar stores currently participating in the lottery.

On June 14, the day the Republican governor signed the budget, the lottery put on hold plans to choose a company to develop and support an online system and games. The winning bidder would have been announced that day, but the evaluation period was extended indefinitely.

The Snyder administration may still be able to create the iLottery after the internal review by spending other money in the lottery budget.

“If they wanted to do it, they still could,” said Rep. Kevin Cotter, R-Mount Pleasant, who is pushing for passage of legislation that would explicitly prohibit an online lottery.

Cotter said he has no problem with Lottery Commissioner M. Scott Bowen pursuing the iLottery because his job is to maximize profits.

“Additional revenue is a good thing for the lottery because that funds schools,” he said. “My concern is that with iLottery, it would allow them to put all their games online. My biggest concerns are with scratch-off games as well as Club Keno. Both of those games online would be very transactional, like a slot machine, one game after another.”

Cotter said he is less concerned with people buying Powerball or Daily 4 tickets online because he sees that as more a matter of convenience.

“This is really state-sponsored, wherever-you-are gambling. People could be at work, could be at home,” he said. “They could be gambling away the home they’re sitting in. State government shouldn’t be blazing the trail on this.”

Lottery officials have said concerns about gambling addiction and racking up debt on a credit card are overblown because the technology of the Internet could restrict how much people play. Players could pre-authorize the lottery to cut them off once they hit caps on spending.

The Snyder administration sees the Internet as a new frontier for lottery business thanks to a U.S. Justice Department opinion released 1 1/2 years ago that says states can offer Internet gambling as long as it does not involve wagering on sports.

Illinois and Georgia sell lottery tickets online. Other states are exploring it.

If the Michigan Lottery expands to the Internet, it could deposit nearly $8 million more to education in year one, according to lottery estimates. That is peanuts considering the school aid fund received a record $780 million in lottery profits last fiscal year. But in an indicator of the potential for growth, profits could grow $471 million in the following seven years.

———Email David Eggert at deggert(at)ap.org and follow him at http://twitter.com/DavidEggert00